Don't Blame the Judges

6 April 1999
Legislatures and voters may make the laws, but judges have to decide what those laws mean in actual, real-world controversies.

Technological advances make their job even more difficult. Take a look at these two cases:

  • Ecumenical Ministries of Oregon v. Oregon State Lottery Commission (1994) - The Oregon State Lottery may use video lottery games.
  • Poppen v. Walker (1994) - The South Dakota State Lottery may not use video lottery games.

The legality of Video Lottery Terminals ("VLTs") often depends upon what judges think the voters intended when they authorized a state lottery years before VLTs were invented. The Supreme Court of Oregon decided that video poker machines did not violate the state constitutional prohibition on casinos, because the lottery initiative included electronic devices. The South Dakota Supreme Court looked at the passive, paper lottery games that were being played by state lotteries at the time and decided voters did not intend that games would be played on machines.

Sometimes the problem is that the law is so old that no one alive today knows exactly what it means. For example, take these two cases:

  • Knight v. State of Mississippi (1990) - Bingo is not a lottery.
  • Harris v. Missouri Gaming Commission (1994) - Bingo is a lottery.

Do hundred-year-old constitutional prohibitions on "lotteries" prohibit a legislature from legalizing the "modern" (only 60-year-old) game of bingo? The question is of great importance, far beyond whether charities can run bingo games.

The year after the Mississippi Supreme Court ruled that the prohibition on "lotteries" is limited to typical lottery games, the state legislature authorized casinos. For the Missouri Supreme Court, the finding that bingo is a prohibited lottery made it easier to rule that slot machines were barred from the state's riverboat casinos.

State supreme courts have the final say on what the state constitution means. So, if the high Court of Mississippi decides that it should look to the popular meaning of "lottery," while the Missouri Court looks to old cases to declare "lottery" means any game of pure chance, they are both right!

Technology and competition for the gambling dollar are forcing judges to make fine distinctions, that do not always seem to make sense. For example:

  • Western Telcon v. California State Lottery (1996) - Lottery may not run Keno games.
  • Donald Trump v. Jeffrey S. Perlee, Director, New York State Division of the Lottery (1995) - Lottery may run Keno games.

In both cases the question was whether Keno was a lottery or a casino-style banking game. The California Supreme Court, which is the state's highest court, and the New York Supreme Court, which is the name of that state's trial court, actually came to the same conclusion.

A lottery traditionally involves players’ bets being put into a pool, the operator taking a percentage off the top, and the remainder going to winners. In Keno there is no pooling of bets, and the "house," in this case the state, participates and cares who win or loses. Both courts ruled Keno is a banking game and could not be operated by the state lottery.

The California opinion was the final word; no appeal was possible. But the New York decision came from a trial court. The trial judge issued a temporary restraining order ("TRO"), preventing the Lottery from starting Keno. The state appealed, and found a New York statute that basically says a court cannot issue a TRO against the state. So, Keno started, and Trump decided not to pursue the law suit.

The same issue, whether Keno is a lottery, is being fought in other states. New Jersey was hit with the embarrassing situation a few years ago of having both its State Lottery and Atlantic City casinos lobbying to offer the same game, Keno.

Players may not care whether a game is technically a lottery or a casino game. But the law often draws such fine distinctions:

  • Gulch Gaming, Inc. v. State (1991) - South Dakota may not restrict gaming licenses to state residents.
  • Chance Management, Inc. v. State (1995) - South Dakota may restrict video lottery licenses to state residents.

In Gulch Gaming, the federal district court ruled that the state could not justify denying Florida residents licenses to operate slot machines and casino table games in Deadwood. The same court and the federal court of appeals ruled that the situation was different in Chance Management, because in that case the state was not just a regulator but was actually the owner and operator of the state's VLTs.

Sometime judges simply come to different conclusions, even when the law and facts are virtually identical. There is really no other way to explain the last two cases:

  • Hatch v. Sharp (1990) - Prison inmates have no constitutional right to play state lottery.
  • Williams v. Manson (1980) - Prison inmates have constitutional right to buy state lottery tickets.

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I. Nelson Rose

Articles by Professor I. Nelson Rose is an internationally known scholar, public speaker and writer and is recognized as one of the world's leading authorities on gambling law. A 1979 graduate of Harvard Law School, he is a tenured full Professor at Whittier Law School in Costa Mesa, California, where he teaches one of the first law school classes on gaming law. Professor Rose is the author of more than 300 books, articles, book chapters columns. He is best known for his internationally syndicated column, "Gambling and the Law ®," and his landmark 1986 book by the same name. His most recent book is a collection of columns and analysis, co-authored with Bob Loeb, on Blackjack and the Law. A consultant to governments and industry, Professor Rose has testified as an expert witness in administrative, civil and criminal cases in the U.S., Australia and New Zealand, and has acted as a consultant to major law firms, international corporations, licensed casinos, players, Indian tribes, and local, state and national governments, including Arizona, California, Florida, Illinois, Michigan, New Jersey, Texas and the federal governments of Canada and the United States. With the rising interest in gambling throughout the world, Professor Rose has spoken before such diverse groups as the F.B.I., National Conference of State Legislatures, Congress of State Lotteries of Europe, United States Conference of Mayors, and the National Academy of Sciences. He has presented scholarly papers on gambling in Nevada, New Jersey, Puerto Rico, England, Australia, Antigua, Portugal, Italy, Argentina and the Czech Republic. He is the author of Internet Gaming Law (1st & 2nd editions), Blackjack and the Law and Gaming Law: Cases and Materials.

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